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The bountiful game

I enjoy rugby union but regular tinkering with the rules is confusing and suggests the underlying principles of the game need constant modification. I am a football man and believe simplicity of the rules is its strength. I was thinking of this when I looked at the changes that the Association of British Insurers’ protection committee are making to total permanent disability.

TPD represents about 3 per cent of critical-illness claims but 55 per cent of TPD claims are declined. This is an awful situation which does our industry no favours at all.

It is right that the ABI is making the overhaul of TPD and CI generally a priority. CI is a product which we failed to future-proof when it was developed in the late 1980s. I blame some reinsurers for believing that you could lift a product from a market like South Africa and drop it into the UK without asking why it emerged there in the first place.

In South Africa, there was no NHS and CI was largely the only way to fund medical treatment for life-threatening diseases. In the UK, as medical treatment advanced and the list of conditions lengthened, it often acted as a marvellous windfall to someone who had bounced back from a brief bout of ill health. In addition, the catch-all TPD condition caused huge PR problems for insurers.

What seems to be emerging from the committee’s work is a recognition that CI should provide cover for those who want to provide lump sums if they have genuinely life-threatening illnesses. It is still a perfect product to cover mortgages. If people want disability cover, the right product is income protection. It is not an unexpected message from me but just because it is familiar it does not make it any less true.

Peter Le Beau is managing director of Le Beau Visage

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It was a matter of luck I suppose that I began a career in the financial services industry. Home on a 72-hour pass from my posting in Germany as a national serviceman, a mate said his girlfriend’s boss was looking for a new recruit. It was a good job – you got a car and played golf most days.

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What carnage across all the markets and almost every asset class. Life office shares for just over 20p and daily percentage swings in blue-chip banks of 20 per cent, interest rates of 0.5 per cent and the bizarre position (since reversed) of sterling increasing in value after a rate cut.

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